Deciding between equity financing and taking on a loan for your business is a challange for all small business owners when they need capital to expand a business. Should you go to a bank and apply for a business loan? Or should you look for an investor?

Consider the advantages and disadvantages of each to determine which type of financing is best for your business:

Equity financing: Having an investor write you a check may seem like the perfect answer if you want to expand your business but don't want to take on debt. After all, it's money without the hassle of repayment or interest. But the dollars come with huge strings attached: You must share the profits with the venture capitalist or angel investor.

Advantages to equity financing:

It's less risky than a loan because you don't have to pay it back, and it's a good option if you can't afford to take on debt.

You tap into the investor's network, which may add more credibility to your business.

Investors take a long-term view, and most don't expect a return on their investment immediately.

You won't have to channel profits into loan repayment.

You'll have more cash on hand for expanding the business.

There's no requirement to pay back the investment if the business fails.

Disadvantages to equity financing:

It may require returns that could be more than the rate you would pay for a bank loan.

The investor will require some ownership of your company and a percentage of the profits. You may not want to give up this kind of control.

You will have to consult with investors before making big (or even routine) decisions -- and you may disagree with your investors.

In the case of irreconcilable disagreements with investors, you may need to cash in your portion of the business and allow the investors to run the company without you.

It takes time and effort to find the right investor for your company.

Debt financing: The business relationship with a bank that loans you money is very different from a loan from an investor -- and requires no need to give up a part of your company. But if you take on too much debt, it's a move that can stifle growth.

Advantages to debt financing:

The bank or lending institution (such as the Small Business Administration) has no say in the way you run your company and does not have any ownership in your business.

The business relationship ends once the money is paid back.

The interest on the loan is tax deductible.

Loans can be short term or long term.

Principal and interest are known figures you can plan in a budget (provided that you don't take a variable rate loan).

Disadvantages to debt financing:

Money must paid back within a fixed amount of time.

If you rely too much on debt and have cash flow problems, you will have trouble paying the loan back.

If you carry too much debt you will be seen as "high risk" by potential investors – which will limit your ability to raise capital by equity financing in the future.

Debt financing can leave the business vulnerable during hard times when sales take a dip.

Debt can make it difficult for a business to grow because of the high cost of repaying the loan.

Assets of the business can be held as collateral to the lender. And the owner of the company is often required to personally guarantee repayment of the loan.

Most businesses opt for a blend of both equity and debt financing to meet their needs when expanding a business. The two forms of financing together can work well to reduce the downsides of each. The right ratio will vary according to your type of business, cash flow, profits and the amount of money you need to expand your business.

For information on debt financing contact Steve Felt at (720) 432-9118 or steve@creativebusinessfinance.com

Despite the challenges, we believe that medical equipment leasing is beneficial to hospitals, health systems, and other health care organizations, and that the medical equipment lessors who truly take the time to understand the considerations in the industry will be able to continue serving it. What is more, we believe that some outcomes of the Affordable Care Act will have a positive impact on hospitals’ financial positions, making them more favorable to lessors. For example, access to affordable insurance will reduce focus and spending on collections from self-pay patients, saving providers time and money. Additionally, Medicaid expansion is likely to improve financial performance for most providers and could spur increased utilization by previously uninsured patients. As medical equipment lessors, an improved financial position of hospitals would be a positive change. A stronger position is good news on all fronts: for the hospitals, for the patients, and for the health care equipment leasing industry. Beyond that, the benefits of leasing medical equipment for customers still remain. As always, better, faster, newer equipment continues to transform patient care – enabling quicker and more accurate diagnoses and treatment. The Benefits of Leasing Medical Equipment Include:

Benefit from Residuals: The residual value of the leased medical equipment will result in low financing rates.

Strategic Equipment Acquisition: Leasing improves a hospital’s access to the newest technology, allowing the organization to seamlessly replace, upgrade or add to equipment systems during the lease or at the end of the lease term.

In today’s economic environment, managing your accounts receivable has become more important than ever. A company’s cash flow is the backbone of every business large and small. The current economic situation has caused many businesses to search out new procedures to adjust. This “adjustment” has been the primary driver for the surge in the number of financially strapped companies we see.

With constant pressure to show revenue growth and profitability, businesses can’t afford to ignore their trade receivables. It has been shown that when businesses relax their payment and credit requirements they are likely to experience a significant reduction in cash flow and a decline in the profitability of their business.

With a Factoring company’s Account Receivable Financing Services, managing your accounts receivables so that you receive final payment is paramount.

The Benefits of Factoring Invoices

Factoring is a great alternative to loans!

Factoring accounts is a quick, easy and affordable way to improve your cash flow.

Turn invoices into instant cash. Through factoring, your business can instantly benefit from the sale without having to wait for your client to pay in 30, 45, 60, or even 90 days.

Increase cash flow and working capital without lowering your equity. Since factoring is not a loan, it does not add liability on your balance sheet. This is especially a benefit if you’re trying to obtain other financing where you need your credit checked.

Make business purchases to increase profitability, like marketing, office supplies and payroll. Use your increased cash flow through factoring company factored invoices to enhance your business.

Unlike bank loans, Invoice factoring allows you to enjoy the benefits of a cash advance without racking up more debt.

Protect and improve your credit rating. Your increased cash flow from business factoring will allow you to pay vendors on time, and establishing a great credit rating.

Take advantage of suppliers’ early payment discounts. Factoring invoices frees up cash enabling you to save up to 4.5% on bills where vendors offer early payment discounts.

Quick and easy approval process. Approval is determined within days of receiving your completed factoring program application.

Factors help you with collections so that your staff can focus on building your business and sales. Factoring programs include accounts receivable management on factored invoices, saving your company the overhead of managing in-house.

By working with a Factoring Broker like Creative Business Finance, you will have access to 100's of Factors and Asset Based Lenders to customize your financing plan.

As a major part of a Factoring company's weekly processes, the team constantly monitors invoices within the past thirty days. They place customer service calls and send past due reminders via email to the accounts payable managers. If your customer is missing an invoice or any supporting documentation, the Factor will immediately forward that information to them electronically. This process guarantees a quick return of payment on your invoices without creating the cost of hiring an account manager.

Other benefits of this process are that factoring can help you manage your credit risk. With a factoring company monitoring the information available through credit reporting agencies we are able to determine credit risk of doing business with both new and existing customers. Determining credit risk before you engage in business with a new customer is critical. Future credit losses can often be avoided by performing a brief investigation of a potential customer’s credit history.

Factoring your Accounts Receivable not only facilitates cash flow but also mitigates unnecessary credit risk, the implementation of mechanisms that reduce the frequency of past due accounts and increase the frequency of invoice payments.

With loan officers in Alaska, Arizona, Colorado, California, Florida, New Jersey, New Mexico, North Dakota, and Pennsylvania, Creative Business Finance is gradually becoming a nationwide leader in Invoice factoring solutions for small to medium size businesses. We can factor invoices in virtually every industry including oil and gas, construction, medical, staffing, transportation and more. If you would like more information please contact us at (720) 432-9118.

*Disclaimer: CBF is a private capital intermediary, we use our resources to connect our clients with the best private lender or specialty finance company for their specific situation. CBF is not a law firm or accounting firm and doesn't provide tax and/or legal advice. Our address is 7830 W. Alameda Ave, Suite 103 #252 Lakewood, CO 80226.